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Company resolutions

A resolution is the formal means by which decisions are made by a meeting of company members. There are two types of resolutions: special and ordinary. The Corporations Act 2001 (the Act) requires many decisions that affect a company to be made by resolution, some of which must be by special resolution. In addition, the constitution of a company may also require that other decisions be made by either an ordinary resolution or a special resolution.

General requirements for the passing of any resolution are that it takes place at a meeting which is properly convened, satisfies the quorum requirements, and is entered in the books kept by the company for that purpose within one month after the meeting is held. The minutes are to be signed by the chair of the meeting at which the resolution was passed or by the chair of the next meeting. Non-compliance with the requirements of the Act could invalidate the outcome of the resolution.

Contents

Special Resolutions
Ordinary Resolutions
Voting on Resolutions
Proxy Documents - Listed Companies
Reporting Obligations
Special Resolutions
A special resolution must be passed at a meeting of which notice as set out in paragraph 249L(c) of the Act has been given. The special resolution must be passed by at least 75% of the votes cast by members who are entitled to vote on the resolution, either in person, or by proxies. Further, a special resolution must be passed at a meeting of which at least 21 days written notice (28 days for listed public companies [s.249HA]) specifying the intention to propose the resolution as a special resolution is given to members. This notice must specify the entire text or substance of the proposed special resolution.

Some of the matters on which a special resolution is required are to:

change the company name;
change the type of the company;
alter the constitution;
reduce the share capital; and
voluntarily wind up the company.
The constitution of a company may provide that a special resolution is also necessary for other decisions.
Ordinary Resolutions

Ordinary resolutions are not specifically defined in the Act and require only a simple majority to pass (ie, more than half of the members present at the meeting, either in person, or by proxies, if allowed by the constitution). Some of the matters on which an ordinary resolution is sufficient are:

election/re-election of directors;
appointment of an auditor;
acceptance of reports at the annual general meeting;
strategic, commercial decisions; and
increase or reduction in the number of directors.
Voting on Resolutions
Where a company has share capital, a member has one vote by show of hands, or on a poll. Each member has one vote for each share held subject to any rights or restrictions attached to any class of shares. For a company without share capital, every member is entitled to one vote both on a show of hands and a poll. The chair has a casting vote, and if a member, also a member's vote.

In the case of a proprietary company, if all members of the company have signed a document containing a statement that they are in favour of a particular resolution that would ordinarily have been passed at a general meeting, then the resolution will be deemed to have been passed when the document is signed by the last member.

A company that has only one (1) member may pass a resolution by the member recording it and signing the record. For director's meetings, the director of a proprietary company that has only one director may pass a resolution by recording it and signing the record.

Proxy Documents - Listed Companies

In a notice of meeting for a meeting of members of a listed public company, the company must specify a place and a fax number and may specify an electronic address for the purposes of receipt of proxy appointments [s250BA].

Listed companies are required to record in the minutes of meeting of members, in respect of each resolution in the notice of meeting, the total number of proxy votes exercised validly and how those votes were exercised [s251AA].

These requirements apply despite anything in the company's constitution.

Reporting Obligations